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Lecture 11

MKT 300 Lecture 11: MKT 300 Chapter 11 Notes

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MKT 300
Susan Fant

Marketing 300 Chapter 11 Notes First Stop: Walmart: The World’s Largest Retailer • Dedicated to long-time, low-price value proposition and what it means to the customers • Lowest cost structure in the industry • Faced difficulty to maintain its growth rates ➢ Solution – pushed into new, faster-growing product and service lines Retailing • Activities involved in selling goods or services directly to consumers for their personal use ➢ Retailer: business whose sales come primarily from retailing • Shopper marketing: using in-store promotions and advertising to extend brand equity to “the last mile” ➢ Encourages favorable point-of-purchase decisions Types of Retailers • Retailer classifications can be based on: ➢ Amount of service offered ➢ Breadth and depth of the product lines ➢ Relative prices charged ➢ Way they are organized Levels of Service • Self-service retailers ➢ Serve customers who are willing to perform their own locate-compare- select process • Limited-service retailers ➢ Carry more shopping goods about which customers need information ➢ Provide more sales assistance • Full-service retailers ➢ Carry more specialty goods ➢ Assist customers in every phase of the shopping process Major Store Retailer Types • Specialty store: ➢ Carries a narrow product line with a deep assortment • Department store: ➢ Carries several product lines ➢ Each line is operated as a separate department • Supermarket: ➢ Large, low-cost, low-margin, high-volume, self-service operation • Convenience store: ➢ Carries a limited ling of high-turnover convenience products at slightly higher prices • Discount store: ➢ Sells goods at lower prices with lower margins and higher volumes • Off-price retailer: ➢ Sells merchandise bought at less-than-regular wholesale prices and sold at less than retail • Superstore: ➢ Very large store for routinely purchased items Major Types of Retail Organizations • Corporate chain: ➢ Two or more outlets that are commonly owned and controlled • Voluntary chain: ➢ Independent retailers engaged in group buying and merchandising ➢ Sponsored by wholesaler • Retail cooperative: ➢ Group of independent retailers who jointly establish a central buying organization and conduct joint promotion efforts • Franchise organization: ➢ Contractual association between a franchisor and franchisees Retailer Marketing Strategies • Retail strategy: ➢ Retail segmentation and targeting ➢ Store differentiation and positioning • Retail marketing mix: ➢ Product and service assortment ➢ Retail prices ➢ Promotion ➢ Distribution (location) • Create value for targeted retail customers Segmentation, Targeting, Differentiation, and Positioning Decisions • Target markets must be segmented and defined • Retailers then decide how to differentiate and position themselves in those markets Product Assortment and Services Decision • Retailers must determine three product variables ➢ Product assortment: offer merchandise that is carried by not other competitor ➢ Services mix: offer unique services ➢ Store atmosphere: create a unique store experience, such as with experimental retailing Price Decision • Price policy must fit the retailers’….. ➢ Target market and positioning ➢ Product and service assortment ➢ Competition ➢ Economic factors • Retailers seek either…. ➢ Everyday low pricing (EDLP), or ➢ High-low pricing Promotion Decision • Retailers use many promotional tools ➢ Advertising ➢ Personal selling ➢ Sales promotion ➢ Public relations (PR) ➢ Direct marketing Place Decision • Locations should be accessible to the target market in areas that are consistent with the retailer’s positioning • Shopping center: group of retail businesses built on a site that is planned, developed, owned, and managed as a unit Types of Shopping Centers • Regional shopping center • Community shopping center • Neighborhood shopping center • Power center • Lifestyle center Retailing Trends and Developments • Tighter consumer spending ➢ Impact of the Great Recession on consumers o Changed spending patterns ➢ Impact of the great recession on retailers o Cost-cutting, price promotions, bankruptcy o New value pitches in positioning • New retail forms, shortening retail life cycles, and retail convergence • Rise of megaretailers ➢ Offer better merchandise selections, good service, and strong price savings to consumers ➢ Have shifted the balance of power between retailers and producers • Growth of direct, online, mobile, and social media retailing ➢ Availability of a variety of nonstore alternatives Retailing Trends and Developments • Showrooming: checking out merchandise and prices in a retail showroom but buying from an online-only rival ➢ Sometimes occurs in the store • Growing importance of retail technology ➢ Produce better forecasts ➢ Control inventory costs ➢ Interact electronically with suppliers ➢ Send information between stores ➢ Sell to customers within stores • Green retailing ➢ Promoting more environmentally responsible products ➢ Launching programs to help customers be more responsible ➢ Working with channel partners to reduce their environmental impact • Global expansion of major retailers ➢ Escaping saturated home markets Wholesaling • Involves all the activities in selling goods and services to those buying for resale or business use • Wholesaler: a firm engaged primarily in wholesaling activities Channel Functions Performed by Wholesalers • Selling and promoting • Buying and assortment building • Bulk breaking • Warehousing • Transportation • Financing • Risk bearing • Market information • Management services and advice Types of Wholesalers • Merchant wholesalers: ➢ Independently owned wholesale business that takes title to the merchandise it handles o Full-service wholesalers provide a full set of services o Limited-service wholesalers offer fewer services to their suppliers and customers • Broker: ➢ Does not take title
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